Tesla shares fall sharply after disappointing their results


The electric car manufacturer records higher losses than expected despite increasing sales.

Is Tesla Company in trouble?

Tesla closed the second quarter with losses of 390 million dollars despite raising sales of the Model 3 electric utility. Red numbers are half of those registered in the same period last year, but are, however, higher than anticipated. The global revenues of the Silicon Valley manufacturer grew by 60%, to 6.350 million, but also below projected. Between April and June, Tesla assembled a total of 87,050 cars and made 95,200 deliveries.

Wall Street received the results with a drop of more than 11%. Tesla usually has a very volatile behavior on Wall Street. Their titles appreciated more than 15% during the last month, but it has dragged a drop of more than 20% since January. Elon Musk, however, maintains so much negativity that the company will be profitable again during the second half of the year and reaffirms the objective of making at least 360,000 deliveries this year.

Analysts, however, want to understand how those expectations translate to the results. Accounts reflect that sales of the Model S sedan and the Model X SUV are moderated. They are cars with the highest profit margin, for their high price. To scale up the production of Model 3 you need to sacrifice the benefit. This happens while preparing to assemble the Model Y crossover, which further squeezes profitability.

Elon Musk later commented, during the presentation of the results, that J.B. Straubel will leave the position of chief technology officer of Tesla to serve as an advisor. The executive was technically number two of the company for the past 15 years. His duties will be assumed by Drew Baglio, who currently occupies the vice presidency. The announcement sustained pressure on the company’s shares.

Notify of
Inline Feedbacks
View all comments